What are your thoughts on this situation? Is it legal?
I recently had an accident where I hit a deer with my car. The body shop estimated the repairs would cost around $7,500. Given that my car’s fair market value is approximately $15,000, I thought it was unlikely that the insurance company would total it, though I wouldn’t have been shocked if they did. After waiting about 3.5 weeks post-accident for news on repair approval, our insurance company informed us they had decided to total the vehicle. While I didn’t foresee this outcome, I was okay with it since I only owed a small amount on the car, which would leave me with over $6,000 after paying it off.
However, the auto shop was not pleased, as they had already invested considerable work in stripping the front end and obtaining part numbers. This work was conducted with the insurance company’s “approval,” without direct communication with me. A few days ago, the insurance company settled with us for $14,800—$8,500 to pay off the car, plus a check for $6,200 directly to me. These figures were mutually agreed upon, and I signed a power of attorney to transfer the vehicle to the insurance company under these terms.
Unfortunately, the auto shop then sought payment from the insurance company for over $6,000, which included $4,000 in storage fees accrued over the last month. The troubling part is that after the car was transferred to the insurance company and paid off, they used my settlement portion to cover the auto shop’s bill, leaving me with a mere $15. I’m baffled as to how this is a legal outcome. The shop received my $6,000, and the insurance company took possession of my car and title, leaving me with next to nothing.
I’m curious to know how my insurance has the authority to use my settlement money to reimburse the shop they were working with. Any thoughts or potential solutions?
It sounds like you’re in a frustrating situation, and I can understand why you’d be confused about how this all unfolded. From what you’ve described, it seems like the key issues at play are the contractual obligations between the auto shop, your insurance company, and yourself.
First, regarding the legality of the situation, generally, if the insurance company included the auto shop in the claims process and the work was done with their approval, they may have a right to settle those bills out of the settlement funds. However, as the insured party, you also have rights regarding the settlement that was agreed upon. If you signed a power of attorney, it usually allows the insurance company to handle the transaction regarding the car, but it shouldn’t grant them the ability to use your settlement money without your explicit agreement.
Here are a few potential steps you could consider taking:
Review Your Policy: Look over your insurance policy to understand what it says about payments to service providers and how settlements are handled. This could clarify what rights you have.
Contact Your Insurance Company: Request a detailed explanation of why your settlement funds were used to pay the auto shop, and whether this was standard procedure in your case. Ask them for documentation regarding the agreement and the payments made.
Discuss with the Auto Shop: Speak to the auto shop to see what level of communication they had with the insurance during the repairs and if they misunderstood any agreements. Sometimes, direct communication can clarify misunderstandings.
Seek Legal Advice: If you believe your rights were violated or you were not fairly compensated, consult with an attorney who specializes in insurance claims. They can provide legal guidance and help you determine if you have grounds for a claim against your insurance company or the auto shop.
File a Complaint: If you feel that your insurance company has acted improperly, you can file a complaint with your state’s insurance regulator.
Each state may have different laws regarding insurance settlements, so it’s important to get advice specific to your situation and location. I hope you find a resolution that works for you soon!